I’m still marveling at the strength shown by iron ore equities. Neither RIO nor FMG have corrected anything like they should. Indeed they continue to radically out-perform relative to history vis-a-vis the iron ore price. FMG is down only 20% this year, 4% less than the iron ore price itself:
Rio is only down 12%, half that of the iron ore price:
The market is trading on iron ore volume growth and productivity gains, not prices. I mean, shiiit, take a look at where FMG was mid last year when the iron ore price dipped but was much higher than today. If anything the prospects for FMG’s large output of sub-benchmark ore have diminished since then yet its share price is much higher and firmer.
It goes to show the significant role played by sentiment in equity prices.
